TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Ray Hadley, 2GB
Tuesday, 5 August 2003

9.20 am

SUBJECTS: Leadership, First Home Buyers, Housing Prices, gay marriages,

teenage children, gambling

HADLEY:

Mr Costello good morning.

TREASURER:

Great to be with you, thank Ray.

HADLEY:

A much more sociable environment than the one that we previously occupied

for your visit.

TREASURER:

It’s much better, I must say. Come up in the world a bit, it must be

all those successful radio commentators, Ray.

HADLEY:

Something like that, or Singo’s got too much money and wants to spoil

us. Something like that. Would it be fair to say, in light of the decision

of the Prime Minister to bat on for a little bit longer, that you have

had to re-assess your goals, and re-assess where you are headed beyond

2003, 4 and 5?

TREASURER:

Well obviously it is important now that we get on with the job and there

was a lot of speculation as you can imagine leading up to that. He has

made his decision and that having been made, we have got to make sure

that we get on with the job of governing the country, and governing it

well.

HADLEY:

It must be difficult but, if you’re viewed by everyone, and I am not

talking about you, but everyone else including, I guess the electorate,

as the heir apparent to either lead the Government, or lead the Opposition,

depending on what happens at the next election, to try and put those

personal disappointments aside, and obviously you have had trouble accommodating

that but, you seem to have come to terms with it now, would that be fair?

TREASURER:

Well, people have always got expectations and want to know what you are

going to do next, but I think it is important to concentrate on the job

you are doing. And people say, well you have been doing that for 7 ½

years, and that is true, but it has been a very difficult time Ray, and

gee, there are a lot of challenges in the economy, and the world economy,

and making sure that we keep people in work, and working at keeping taxes

down. And that is a pretty full-time occupation and that is what I am

focusing on.

HADLEY:

Historically people go from being the Treasurer to being the Leader,

but it doesn’t seem to go hand in hand, and would it also be fair to

say that in more recent times, you are trying to overcome the fact that

people view you as being a bit of a bogey man, that you are out there,

that you are the wicked fellow that does all these things to us, but

you are trying to portray that there is another side to me, that I am

not all bad news and doom and gloom about Treasury and about what happens

to the Budget.

TREASURER:

Well I think that is true. The Treasurer’s job is the second most difficult

job in a government after the Prime Minister’s job, and because you are

the person that is responsible for the finances, you often have to deliver

the unpleasant news which is, no we can’t afford to spend more money,

no we can’t afford to engage in new programs for other Ministers, and

you do tend to become the tough guy in the Government, if you are doing

your job properly. We have had Treasurer’s that didn’t do their job properly

and their whole economy paid for it. But if you are doing your job properly,

you do tend to become the tough guy and the, one of the advantages that

other Ministers have is they get to announce the good news, you get to

announce the cost of the good news. So, that is difficult but, when you

get the chance, and I do from time to time, to talk about other non-economic

issues, actually I find it very stimulating. People actually write to

me and say, gee we never knew you had views on social fabric of society,

which I have been talking about a lot recently, or how to strengthen

families, and it does come as a breath of fresh air when you actually

talk about it.

HADLEY:

It is a bit hard perhaps, when people view you as being one-dimensional.

That can happen to a lot of people in a lot of areas because they think

that is the little pigeonhole that he fits in to, and doesn’t do much

else about.

TREASURER:

I think that is right. You don’t often get the opportunity to talk about

wider issues, because this is just a full-time hands on job, and you

are doing budgets, and interest rates, and taxes…

HADLEY:

Real exciting stuff.

TREASURER:

…well, you know, necessary but, the truth of the matter is this Ray.

If something goes wrong in the economy, if interest rates were to go

back to 17 percent, where they were, as you remember under Labor…

HADLEY:

Yes, I bought my first house at that particular time.

TREASURER:

…17 percent, you know, or if we were to go into a recession and unemployment

would jump to 11 percent, then people would be screaming the place down

and millions would be thrown out of work. And so it doesn’t sound interesting,

running Budgets and taxes and the economy and all the rest of it, but

at the end of the day what it does is it keeps people in work and allows

them to have homes, and it pays for the education of their kids, and

all of the things that they think are really important, and they are

really important.

HADLEY:

Well let’s talk about some of those other issues. Homes. You live in

Melbourne, obviously we live in Sydney, and it is particularly difficult

for first homebuyers to get into the market. Mr Howard made the point

with my colleague Alan Jones yesterday morning, that those of us that

have homes aren’t whinging about the escalation prices, but those trying

to get into the market. What about other capital cities, your hometown,

is it as difficult for first homebuyers in Melbourne as it is in Sydney?

TREASURER:

Oh Sydney is the most expensive town in Australia, there is no doubt

about that. And the median price, that is the average price you pay for

a home in Sydney is…

HADLEY:

$460,000.

TREASURER:

…$460,000.

HADLEY:

It buys you a lot in Melbourne or Brisbane.

TREASURER:

It would buy you more in Melbourne, it will buy you more again in Brisbane,

it would buy you a pretty good house in Hobart, if you were living in

a country town, $460,000 would buy you a great house. A fantastic house,

probably on about 5 acres.

HADLEY:

You might be in the middle of a drought and won’t have a job, but at

least you will have a nice house.

TREASURER:

…so Sydney is the most expensive town in Australia, there is no doubt

about that. That is fine if you’re in the market, as John Howard said

yesterday, and I have been saying all week, our plan is not to bring

down the value of people’s homes. People who have actually invested a

lot of money, don’t want the value of their investment to fall. I want

to be very clear about that. But, for those that are trying to get into

the market for the first time, that first home is the hard one. Once

you have got a home, as you know Ray, the price tends to go up, you make

a little bit of a gain when you sell it and you buy your next one. For

most of us, I’m sure you’re the case we started off with pretty cheap

home, but we have, over the course of our lifetimes, been able to trade

up. So it is just a question of the first homeowner getting that first

homeowner into the first property and that is the question that we are

going to look at. I have called an inquiry into that to see what can

be done. A lot of ideas are now coming forward. For example the release

of more land, looking at some of the costs in relation to stamp duty,

and we will have an inquiry, it will be an open inquiry and we will look

at the results as they come back.

HADLEY:

It’s all pretty pointless, the finger pointing from the State Government

and the finger pointing from the Federal Government, saying well you

charge GST on new homes and you charge stamp duty on new and pre-owned

homes. I mean at the end of the day, if the interest rates, and we will

have an announcement on that shortly, stay at the affordable level they’re

at at the moment, we’re going to have a problem because while it’s $467,000

the median price in Sydney, it means that it is far more affordable at

six and a half percent than it would be at twelve and a half percent.

TREASURER:

Oh, absolutely. This is the other point that I keep on making. The fact

that interest rates are now at thirty-year lows, means that people have

been able to afford better houses. And that is one of the reasons why

prices have gone up, absolutely. Ray, you could bring houses down tomorrow,

if you wanted to go back to a 17 per cent interest rate. That is what

Keating and Hawke did back in the late 1980’s early 1990’s, but that

is not the plan here. The plan here, is, not to put up interest rates

and bring on a recession. The plan is to ensure that interest rates remain

low, so that people can afford good housing. It is this question of getting

the first, first stake in the market. I just want to make one point about

GST because you raised it then. We have done the figures these will come

out in the Productivity Commission inquiry, 85 per cent of first home

buyers buy established homes on which there is no GST. So it is an absolute

furphy to say this is somehow related to GST. Eighty five per cent of

first homeowners buy established homes. It might be a flat, it might

be a unit. There is no GST on established homes.

HADLEY:

And so their second home would be affected by GST but that comes when

they are in a much more stronger position

TREASURER:

If you buy a new home, a newly constructed home, the GST will go into

the construction cost. But, as you know yourself, your first homebuyer,

your young couple don’t tend to go and buy a brand new home. In fact

only 15 per cent do that. What they tend to do is buy a flat or a unit

and get their place in market. So this is not GST question. There are

a lot factors that I said that are impacting. I have made the point,

I do believe that as prices have gone up the stamp duty rates have remained

unchanged and that has worked against first homebuyers

HADLEY:

Mr Howard has today ruled out supporting gay marriages, I note off the

website, because they’re now incompatible with an institution

designed to ensure the survival of the species. Where do you stand on

so called gay marriages

TREASURER:

Our view is that marriage is a partnership between a man and woman and

that is the definition we’ve got in legislation. I think that has always

been the understanding of marriage. The legal definition of marriage

and the legal institution of marriage, and obviously people have relationships,

and they might be long term relationships between people of the same

sex, but to have a marriage, it has to be people of the opposite sex.

HADLEY:

That is the legal definition. What does Peter Costello personally think

of it

TREASURER:

I think that’s the right legal definition, but as I said earlier, obviously

I understand and accept that there are many people of the same sex who

have a relationship and a partnership, and sometimes a long term partnership.

I understand that and I respect that.

HADLEY:

Do your views change as you get older. Do you find that the things that

you held near and dear at twenty one and twenty two disappear as you…

TREASURER:

Look I think over the course of your life you do change a lot…

HADLEY:

Do you think that you get softer or tougher?

TREASURER:

Um, probably softer.

HADLEY:

Is that because of wife and family or other influences?

TREASURER:

Yes, in my experience as you go through life, and you see different things,

you get more understanding and more accepting. That has been my experience

anyway, particularly and as you go through life and you have teenage

kids, you have to get more understanding and more accepting. Whether

you like it or whether you don’t, that’s has also been my experience.

HADLEY:

I’m just getting into phase myself.

TREASURER:

Are you?

HADLEY:

I know why you’re laughing.

TREASURER:

Yes, well prepare yourself for it. Believe me nothing prepares you for

it until you have been through it. I think a lot of parents will say

that…

HADLEY:

It’s funny how people will say to you when you’ve got children, and I’ve

got three younger than teenage and one into the teenage years and said

to me “Oh look you don’t know what’s going to happen, these three

girls of yours are going to get up there and then all of a sudden you

think, no, I’m doing exactly what I should be doing as a parent, and

all of a sudden you say to wife, gee, things are going tremendously well

and then yesterday something happens you think, well maybe I’m not quite

at adept to all this as I thought I was 48 hours ago.

TREASURER:

Well I once heard a definition that said a conservative is a person who

used to be a liberal but who now has a teenage daughter…

HADLEY:

(laughing) It’s probably…

TREASURER:

…nothing will prepare you for it Ray, so get ready. You have the people

who say when they’re young, they’re a handful but in my experience they

can more difficult when they’re older.

HADLEY:

We are all influenced by our friends and our family and we discussed

wives and children but what about siblings? Your brother’s a high profile

man who has views and particularly set views in some areas which many

people support and others don’t. Do you converse with Tim regularly…

TREASURER:

Oh sure and on some things we agree, and on some things we don’t…

HADLEY:

You would be disappointed if you agreed on things surely because that

is the nature of life, is it not?

TREASURER:

Oh look, in families you know people have different views, and I think

that is probably the strength of families. That’s what makes individuals.

Some things we, for example, he’s been campaigning against gaming, poker

machines. I agree with him on that. I think there a far too many of them

and in fact we called a big federal inquiry into the issue and put it

squarely on the political agenda. There are other things that I wouldn’t

agree with him on. And he has criticised me from time to time, that’s

fair enough. I’ve got broad shoulders.

HAELEY:

In relation to poker machines and gambling generally. Poker machines

particularly, we can take the blame for that here in New South Wales,

we started it all. And I think it is now a crutch that the Carr Government

relies for revenue upon and all of a sudden there is no where else to

go, because if the gaming machines disappear, and as they put restrictions

on them, so when they put the restrictions on and no more machines now

they’re attempting to double the tax on the clubs because there is no

money coming in and no continued income stream because instead of getting

thirty poker machines in a pub now the prospect was maybe 40 or 45, but

they’ve capped it. Which is I guess admirable. What it means is just

the taxes go on, and they’ve got to pay for the hospitals and the schools

and roads

TREASURER:

Well, this the problem when a Government gets dependent on it, you see,

what the Productivity Commission Report showed, is a very high proportion

of the revenue that comes through pokies actually comes from problem

gamblers. And so whilst Governments will say, oh, we don’t want to encourage

problem gambling, the truth of the matter is, if you wiped out all problem

gambling then the revenues would significantly deteriorate as would the

tax takes. So, a Government has this conflict of interest, in its better

moments it is saying to itself, we should try and prevent problem gaming

or problem gambling, from developing. On the other hand, it is saying

but we want to keep our revenues up. So this is one of the difficult

situations Governments get themselves into. They become too reliant on

these activities.

HADLEY:

And of course they have available all these gaming machines, phone the

G line. By the time the poor bugger has finished they don’t have the

money to phone the G line anyway.

TREASURER:

Well, that’s right and the thing, look if there are people that put money

in a poker machine and they can walk away, okay fair enough, it is their

money. But we do know, that there are people that can’t walk away and

we do know in relation to poker machines, that is quite a significant

part of the revenue and these are the people that shouldn’t be there

that need help not to be there, to be able to walk away. And yet if all

of them did, then the revenues and the tax take would be down significantly.

HADLEY:

Okay, we are getting half way or beyond half way through 2003. You appear

to be at peace with decisions taken by people that you are affected by.

What is the time frame for the next step for Peter Costello. Have you

had dialogue with the Prime Minister about that?

TREASURER:

Well, obviously I have spoken to him about the party, and about the future,

and you know I have been the deputy leader and he is the leader and we

do talk about it. I think it is our responsibility to make sure that

the party is put in the best state possible to form Government and to

run the country.

HADLEY:

Is he reluctant to talk about it or do you go to him and say “John,

in (inaudible)…you can’t go on forever, you can’t be when you’re seventy.”

TREASURER:

Well, we have had various discussions, I’m not going to go into detail

obviously, but we’ve had various discussions…

HADLEY:

He’s not going to be here till he’s seventy

TREASURER:

I’m not going into anything like that, Ray, because you know, these things

tend to get magnified, but obviously we’ve had some discussions and I

think both of us want to do what’s in the interests of the party and

the Government and the country.

HADLEY:

Right, I don’t know how you will take this but in a perverse sort of

way, I think he’s actually done you a favour, because if we look at Peter

Costello twelve months ago, I mean we haven’t seen the other side and

how he feels about all those other issues. Because there is an interim

period and he continues on, I think it gives you an opportunity to explain

to the electorate about the fact that you are more than one dimensional,

that you do care about other issues and you’re not just some bloke in

the back of Parliament in some room looking at figures and deciding whether

we can take it from here and put it there and all the rest of it. And

then people know that you care about all sorts of other issues. And so

to a certain extent, I think inadvertently, he has done you a favour.

TREASURER:

Well, as you say Ray…

HADLEY:

You always look on the positive side. I’m trying to find inaudible

TREASURER:

You’re really heartening me there, Ray.

HADLEY:

I can see the enthusiasm oozing from every pore.

TREASURER:

No, look it is a fair point, and you have got to look at things from

different perspectives. I think that is quite right.

HADLEY:

All right, you have got other things to do I appreciate you coming in

to say g’day this morning. We hope to see you again in the near future

TREASURER:

Thanks very much for your time Ray.